Trade Talks With Ec A Standoff

May 29, 1992|By Michael Arndt, Chicago Tribune.

WASHINGTON — In the six years that negotiators have been struggling to write another world-trade agreement, U.S. farmers and food companies have grown used to disappointment. It`s a good thing they have, because that`s what they felt again Thursday.

Following last week`s European Community decision to cut farm payments, EC officials met with the Bush administration this week, hoping the tough action would soften demands that Western Europe significantly reduce its agriculture export subsidies and thus enable the trade talks finally to proceed.

But after two days of high-level discussions, there was no breakthrough. The Europeans explained their new farm policy and left for home Thursday with a number of technical proposals from administration officials on how to incorporate the reforms into an international trade pact.

Neither side, however, shifted from its basic positions on Europe`s trade policies, leaving the long-stymied multilateral trade negotiations essentially where they were before this week`s session in the White House.

Moreover, the European delegation offered no solution to the worsening dispute between the U.S. and the EC over its subsidies to soybean producers.

The administration is threatening to retaliate by imposing tariffs on $1 billion of European imports.

The Bush Cabinet met Thursday to decide which products would be hit by the tariffs, which would double prices of those goods. The list could be announced as soon as next week.

``American agriculture has seen talk for years now,`` said Nancy Foster, spokeswoman for the American Soybean Association. ``There`s growing frustration in rural America over that.``

``I don`t think there was any progress made that one could point to,``

said Paul Drazek, international trade specialist for the American Farm Bureau Federation.

Administration and EC officials agreed to go over the issues again before July`s annual economic summit of the leaders of the Group of 7, the big industrialized democracies. But progress isn`t assured.

Restrained by domestic farm interests, neither side can budge without risking backlash. Thus, at the presummit meeting, the Europeans might reject the administration`s technical suggestions. The G-7 leaders are likely to try to avoid the debate because it would upset their display of unity.

The trade negotiations ``will come to a conclusion only when the heads of state bite the bullet,`` said Sen. Max Baucus (D-Mont.), chairman of the Senate International Trade Subcommittee. ``And I don`t see that yet.``

Talks to promote trade, dubbed the Uruguay Round after the site of their opening session, have been at an impasse over demands by the U.S. and other grain exporters that the EC open itself more to foreign farm commodities and deeply cut its agriculture subsidies.

Europe resolutely dismissed the demands until last week. Reacting in part to the international criticism, the 12-nation community overturned 30 years of policy and agreed May 21 to slash farm price-support payments. Hit hardest will be grain farmers, whose subsidies will fall by 29 percent.

Though the EC`s turnabout has riled European farmers, it has not appeased the Bush administration, as EC officials thought it would.

That`s partly because the EC has not reduced its export subsidies, which allow European concerns to sell goods at below-cost prices and take away sales from Americans in other markets. EC officials, meanwhile, counter that a drop in price-support payments effectively amounts to lower export subsidies.

In addition, the EC has not altered tariffs on imported agriculture products. Those levies, which grain-exporting nations insist must be reduced by at least 15 percent, inflate prices of foreign goods, inhibiting sales.

The EC seems to be similarly hung up over its soybean subsidies.

The General Agreement on Tariffs and Trade, the Geneva-based world-trade body, twice has concluded that those payments unfairly block U.S. exports. But the EC has stuck with its policy.